Template-type: ReDIF-Paper 1.0
Author-Name: Filippo Brutti
Author-Name-First: Filippo
Author-Name-Last: Brutti
Author-Name: Philip U. Sauré
Author-Name-First: Philip U.
Author-Name-Last: Sauré
Author-Person: psa635
Title: Repatriation of Debt in the Euro Crisis: Evidence for the Secondary Market Theory
Abstract: The Euro Crisis has stopped the process of the European financial integration and triggered a strong repatriation of debt from foreign to domestic investors. We investigate this empirical pattern in light of competing theories of cross-border portfolio allocation. Three empirical regularities stand out: i) repatriation of debt occurred mainly in crisis countries; ii) repatriation affected mainly public debt; iii) public debt of crisis countries was reallocated to politically influential countries within the Euro Area. Standard theories are in line with pattern (i) at best. We argue that the full picture constitutes evidence for the "secondary market theory" of sovereign debt.
Length: 54 pages
Creation-Date: 2014
Contact-Email: forschung@snb.ch
File-URL: https://www.snb.ch/en/publications/research/working-papers/2014/working_paper_2014_03
File-Format: text/html
Number: 2014-03
Classification-JEL: F34, F36, G01, G11, G21
Keywords: Debt Repatriation, Sovereign Risk, Secondary Markets, Euro Crisis, Portfolio Home-Bias
Handle: RePEc:snb:snbwpa:2014-03